Is Covid-19 in fact exposing, rather than causing, The University of Edinburgh’s financial troubles?

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There has been much said about the emails recently sent from Peter Mathieson. On the 24th of April he stated that Edinburgh needed to “think the unthinkable” and in a later email added that “staffing and non-staffing costs will need to be cut”. National organisations such the BBC and The Scotsman have reported on the details of these emails, with emphasis on the impact that Covid-19 has had on finances in Higher Education. Peter Mathieson highlighted the undeniable impact that Covid-19 has had on the sector. He outlined the university models prediction of a significant reduction in income from international students, with a £70-150 million hit in the coming twelve months alone.

The analysis has centred on the cuts required and has barely questioned whether Covid-19 is the root cause. Having read a leaflet from The Edinburgh Staff-Student Solidarity Network, The Student has reviewed the original documents which the group based its public statement on. The Audit Scotland report on Scottish Universities showed that between 2014-15 and 2017-18, the amount of income from non-EU fees rose by 39% to £47m. Sadly, this perceived bottomless source of finance has now come to an end.

Reading the University of Edinburgh 2018-19 Annual Report has also revealed other pinch points. Peter Mathieson mentioned the cost of releasing students from their rental contracts for the remainder of this academic year. He did not, however, mention that the income from student residences and catering combined were named last July as an area of strong income growth.

In fact, last academic year these areas generated £79 million of income – close to a third of the £234 million raised by the university from non-teaching and research sources. This means that seven per cent of the university’s income came from students living in university accommodation and paying for food in the catering outlets. From The Student’s review of the 2018-19 annual report, the equivalent figure for the University of Glasgow would appear to be 4.4%. The reasons for this may be varied but a difference appears to exist.

This funding shortfall will have an impact on the student experience. The University has frozen recruitment, and sources at the local Edinburgh branch of the University and College Union have confirmed that no guarantees have been made to the 3540 staff on fixed term contracts beyond July. The money from tuition fees and government grants does not cover the cost of the research and teaching.This means that the university has been cross-subsidising from ‘profitable areas’ in recent years. A result of this is that the research which has propelled the university to 4th in research power in the UK and 20th in the QS standings may have to be cut.

In an additional concern, the university report reveals the existence of a £250 million pound loan “at favourable rates” which it stated would be invested in capital. However, the latest email informs staff that £92 million has been saved by cancelling all but essential work on the university estates. This raises questions as to what the money will be spent on. If it is instead funding day-to-day expenses, this needs to be acknowledged and the implications outlined.

Covid-19 is clearly a pressure for all universities. A pandemic of this scale will evidently impact the financial position of even the most robust institutions. However, it seems unclear that the University of Edinburgh was among them. Peter Mathieson’s email has outlined the stark questions facing the university. It has not, however, provided many answers.